The Australian dollar continues to lose ground, having fallen for a fourth consecutive day. Currently, the AUD / USD is trading at 0.7329, down 0.18% on the day. The pair could drop to 72 territories as of today and is trading at its lowest level since November.
It has been a difficult time for the Australian. Traditionally, July has been one of the strongest months for the currency, but this month of July has been dismal, falling 2.44%.
The RBA released its July meeting minutes. At the meeting, the RBA reduced its weekly bond purchases from AUD 5 billion per week to $ 4 billion per week in September. The minutes noted that there had been an intense discussion around the reduction, with members recognizing that a strong argument could be made not to reduce, given that the Bank’s inflation targets and employment had not been achieved. Ultimately, policymakers chose to go ahead with tapering. The minutes also reiterated that Bank members did not expect conditions to warrant a rate hike until 2024.
Cone yes, dovish no
Investors and traders take note – the RBA provides an important lesson for those who wish to listen and learn. The Bank continued to cut, which grabbed the headlines and pushed the Australian dollar higher. However, the gains were short-lived, as the Bank maintained its accommodative stance even though it (modestly) tightened its policy by reducing its quantitative easing program. Investors and traders who grabbed Aussies after the RBA cut have taken the plunge, as the Aussie has largely fallen since the RBA meeting earlier this month. Clearly, a tap means that a central bank has turned into a hawk; In the present case, the RBA said at its meeting that a stimulus would be needed and that rate hikes were far away, even while easing at the same time.
AUD / USD Technical
- AUD / USD is testing 0.7319 support. Below there is support at 0.7247
- There is a low resistance at 0.7358, followed by a resistance at 0.7541